1. FX Outlook
  2. Daily FX Report



The Euro-Zone April inflation rate was confirmed at 7.0% with the underlying rate also in line with the flash reading at 5.6%. The ECB will be particularly concerned over the core rate and the risk of further second-round effects which could keep inflation well above target.

The Euro overall was unable to recover ground with markets fretting over the outlook for yield spreads. The Euro-Zone data has been generally weaker than expected while the Federal Reserve has remained committed to a hawkish stance to bring inflation under control.

Comments from ECB officials will continue to be monitored closely in the short term while the PMI data next week will be important.

US housing starts increased slightly to an annual rate of 1.4mn for April from 1.37mn the previous month and in line with consensus forecasts while building permits edged lower to an annual rate of 1.42mn from a revised 1.44mn previously and slightly below market expectations.

The Euro retreated to 6-week lows at 1.0810 before securing a slight recovery to the 1.0830 area at the European close.

Narrow ranges prevailed on Thursday with the Euro held below 1.0850 as the dollar maintained a firm underlying tone. Activity will be dampened to some extent by holidays in parts of Europe with US developments set to dominate during the day.




The dollar maintained a firm tone into Wednesday’s New York open with a challenge on the 137.00 area against the yen.

House Speaker McCarthy stated that he would spend all his effort to resolve the debt-ceiling issue and that there is the opportunity to find common ground, but only a few days to get the job done. He added that there would not be a debt default.

President Biden stated that he is confident that an agreement on the debt limited will be reached, but negotiations will inevitably be fractious.

Treasuries lost ground after the New York open and, although the moves in yields were relatively contained, the dollar continued to gain strong support with highs above 137.50 against the Japanese currency at the European close.

Reservations surrounding the Chinese outlook continued to underpin the US currency to some extent. The dollar was unable to secure fresh 2-month highs against the yen and settled just above 137.50 on Thursday with markets monitoring Federal Reserve rhetoric during the day.

Developments surrounding the US debt ceiling and moves in US yields will also be a key factor with the latest US jobless claims data watched closely.




Sterling lost ground in early Europe on Wednesday, primarily under the influence of a stronger US currency with 3-week lows close to 1.2420 against the US currency.

Bank of England Governor Bailey stated that the economic outlook is much brighter than it was a few months ago with the bank now forecasting modest growth rather than a shallow and long recession. Bailey noted that inflation has been higher than expected, but that it will decline sharply over the next few months. He reiterated that inflation risks are skewed to the upside and the bank’s commitment to the 2% target is unwavering.

He added that there was evidence of the labour market softening, but at a slower pace than expected by the bank in February.

There were no significant dovish elements in the comments and Sterling regained ground later in the day.

The UK currency recovered to near 1.2500 against the dollar at the European close with the Euro retreating to the 0.8680 area.

Sterling was unable to make any further headway on Thursday and traded around 1.2465 with markets waiting for further comments from Bank of England officials.




The Swiss franc edged lower on Wednesday, although overall moves were limited as markets continued to debate the global economic outlook. The Euro settled around 0.9740 with the dollar advancing to highs at 0.9025 before a dip back below the 0.9000 level.

The dollar was held just below 0.9000 on Thursday with global elements dominating, especially with Swiss markets closed for a holiday

Technical Levels 

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Economic Calendar

Fx Daily Calendar 18052023



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